Russia's rouble has taken a hit in recent months, with some economists warning it is the closest the nation has come 'to a real economic problem since the start of the war'.
Is Russia having an economic crisis?
That bolsters spending on the military and on social programs aimed at blunting the impact of sanctions on the Russian people. Amid sanctions and restrictions on moving money out of the country, the rouble exchange rate is largely in the hands of the central bank, he added. It can tell major exporters when to exchange their dollar earnings into Russian currency.
The chaos at the start of sanctions was far worse, but since then, the rouble's decline "is the first time that something seems to be not so much under control", he said.Any boost to the budget from a lower rouble is offset by higher spending on government wages and pensions, he said, which are indexed to the inflation caused by the lower rouble.
While higher interest rates will dampen economic growth, relieving some pressure on prices, the government is unlikely to back off on military spending.
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